Question
Please help me with these multiple choice questions. In the absence of technological progress, a reduction in the saving rate will not affect which of
Please help me with these multiple choice questions.
In the absence of technological progress, a reduction in the saving rate will not affect which of the following variables in the long run in the Solow model?
a. output per worker
b. the growth rate of output per worker
c. the amount of capital in the economy
d. capital per worker
Consider the basic Solow model with production function =0.250.75, saving rate of 20% and depreciation rate of 10%. Which of the following is true? The saving rate is:
a. less than the `golden rule' saving rate, hence the economy is saving too much
b. less than the `golden rule' saving rate, hence the economy is saving too little
c. greater than the `golden rule' saving rate, hence the economy is saving too much
d. greater than the `golden rule' saving rate, hence the economy is saving too little
According to the Mundell-Fleming model, which of the following policy configurations is likely to be unsustainable for a small open economy?
a. capital controls, independent domestic monetary policy, fixed exchange rate
b. capital controls, independent domestic monetary policy, floating exchange rate
c. perfect capital mobility, independent domestic monetary policy, fixed exchange rate
d. perfect capital mobility, independent domestic monetary policy, floating exchange rate
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